180 Degree Capital Corp. Reports Net Asset Value per Share (“NAV") of $5.02, Comprised of 99% Cash and Public Securities, as of December 31, 2023

Rhea-AI Summary

180 Degree Capital Corp. (NASDAQ: TURN) reported a +6.9% gross total return in the fourth quarter of 2023, leading to an increase in net asset value per share from $4.91 to $5.02. The company's assets are now predominantly investments in public companies and cash. The US economy's resilience, combined with potential interest rate reductions, is expected to benefit the company's investments in 2024. 180 Degree Capital anticipates constructive activism and catalysts at portfolio companies to drive value creation for shareholders.

Financial Analyst

The reported +6.9% gross total return in 180 Degree Capital's public portfolio is a robust indicator of the company's financial health and performance, particularly given the context of the past year's market volatility. The increase in net asset value per share (NAV) from $4.91 to $5.02 reflects a positive trajectory for the company's asset valuation, which should be of interest to current and potential investors. The portfolio's shift towards public investments and cash suggests a strategic repositioning that may offer more liquidity and potential for capitalizing on market movements. This could indicate a conservative approach, potentially reducing exposure to the higher risks associated with private equity investments.

Regarding the macroeconomic climate, the cessation of the Federal Reserve's tightening cycle and the potential for interest rate reductions could indeed serve as a tailwind for investments, particularly in the microcapitalization stocks that 180 Degree Capital specializes in. These stocks often react more positively to such macroeconomic shifts due to their higher sensitivity to capital costs and economic growth prospects. However, investors should be cautious and consider the inherent volatility and risk in microcap investing.

Market Research Analyst

The focus on constructive activism by 180 Degree Capital is an intriguing strategy that can differentiate the company from other investment firms. By engaging with the management teams and boards of portfolio companies, 180 Degree Capital aims to unlock value that may be overlooked or underappreciated by the market. This approach requires a nuanced understanding of the companies' operations, competitive landscape and potential for growth. It's also a move that can foster long-term relationships and potentially lead to more significant influence and control, as evidenced by the invitation to join the Board of Directors of Synchronoss Technologies, Inc. (SNCR).

For stakeholders, the implications of this strategy are twofold. On one hand, it could lead to enhanced performance of the portfolio companies and, consequently, higher returns for 180 Degree Capital's stockholders. On the other hand, it involves a level of engagement and resources that may not always yield the expected results, adding a layer of risk to the investment strategy. The success of this approach will largely depend on the company's ability to effectively leverage its skill set and contacts to bring about meaningful change within its portfolio companies.

Economist

180 Degree Capital's report is indicative of a broader economic trend where microcapitalization stocks are gaining attention as potential growth vehicles, particularly in a post-tightening cycle environment. Microcaps are often seen as a leading indicator of economic trends due to their domestic focus and sensitivity to consumer demand. The company's anticipation of a return to risk asset classes aligns with the expectation that investors may be seeking higher yields in a potentially lower interest rate environment.

However, it's important to note that while these conditions can be favorable, they also present challenges. Microcap companies can be susceptible to rapid changes in market sentiment and liquidity issues. The broader economic resilience mentioned by the company is a critical factor that can mitigate some of these risks, but it does not eliminate them. Investors should be aware of the cyclical nature of these investments and the potential for significant fluctuations in value.

MONTCLAIR, N.J., Feb. 20, 2024 (GLOBE NEWSWIRE) -- 180 Degree Capital Corp. (NASDAQ:TURN) (“180 Degree Capital” and the “Company”), today reported its financial results as of December 31, 2023, and noted additional developments from the first quarter of 2024. The Company also published a letter to shareholders that can be viewed at https://ir.180degreecapital.com/financial-results.

“The fourth quarter of 2023 was the start of what we believe will be a return to risk asset classes, including the microcapitalization stocks in which we invest,” said Kevin M. Rendino, Chief Executive Officer of 180 Degree Capital. “Our +6.9% gross total return in our public portfolio was the primary contributor to the growth of our net asset value per share (“NAV”) from $4.91 to $5.02. Our assets on our balance sheet are now almost 100% comprised of investments in public companies and cash¹. On the macroeconomic front, the resilience of the US economy combined with the apparent end of the Fed’s tightening cycle and likely future reductions in interest rates should be one tailwind for our investments in general in 2024. For 180, we believe 2024 will be a year defined by our constructive activism and by long-awaited catalysts at certain of our portfolio companies that together could lead to material value creation for 180 Degree Capital’s stockholders.”

“180 Degree Capital’s constructive activism focuses on working with management teams and/or boards of directors of our portfolio companies to build value for all stakeholders in those businesses,” said Daniel B. Wolfe, President of 180 Degree Capital. “We do not have the hubris to believe we know the businesses of our investee companies better than their management teams and boards. We believe we have a complementary skill set and contacts that can help unlock trapped value. We believe this complementarity is what led to the invitation to join the Board of Directors of Synchronoss Technologies, Inc. (“SNCR”). We have rolled up our sleeves to help SNCR’s management and board wherever possible and could not be more excited about the opportunity for value creation that we believe exists for SNCR. It is unfortunate that the Board of Directors of comScore, Inc. (“SCOR”), does not have the same openness and humility to recognize they do not have all the answers to fixing the destruction of value that has occurred under their watch. We believe our nominee, Matthew F. McLaughlin, the former COO of DoubleVerify Holdings, Inc., has both relevant industry experience for where SCOR is heading with its business and can be an advocate for proper corporate governance, particularly for common stockholders, as a significant common stockholder himself. We believe our constructive activism is not only a differentiated investment approach, but also can be an important part of the ultimate unlocking of value for our portfolio holdings and the creation of value for 180 Degree Capital’s stockholders.”

Mr. Rendino continued, “As we noted in a press release on February 1, 2024, the discount of our NAV to our stock price was approximately 26% as of the end of January 2024. This discount equates to a NAV as of the end of January 2024 that was approximately 8% higher than at the end of 2023. We established the Discount Management Program to make it clear that the management and Board of Directors of 180 Degree Capital are serious about our intentions to narrow this discount. We collectively own almost 12% of 180 Degree Capital’s outstanding shares, and this ownership continues to grow solely through open market purchases. We are laser-focused on creating value for all stockholders of 180 Degree Capital through growth of our NAV and the narrowing of the discount.”

The table below summarizes 180’s performance over periods of time through the end of Q4 2023²:

	Quarter	1 Year	3 Year	5 Year	Inception to Date
	Q4 2023	Q4 2022- Q4 2023	Q4 2020- Q4 2023	Q4 2018- Q4 2023	Q4 2016- Q4 2023
TURN Public Portfolio Gross Total Return (Excluding SMA Carried Interest)	6.9%	-7.3%	-22.0%	51.0%	182.8%
TURN Public Portfolio Gross Total Return (Including SMA Carried Interest)	6.9%	-7.3%	-20.0%	61.2%	201.4%
Change in NAV	2.2%	-20.6%	-45.9%	-36.6%	-28.5%
Change in Stock Price	-3.3%	-22.3%	-38.4%	-21.9%	-1.0%
Russell Microcap Index	16.1%	9.3%	1.8%	50.6%	48.3%
Russell Microcap Value Index	16.8%	9.5%	25.9%	64.8%	62.1%
Russell Microcap Growth Index	15.7%	7.1%	-25.8%	28.9%	28.6%
Russell 2000	14.0%	16.9%	6.7%	60.6%	63.8%

Mr. Rendino and Mr. Wolfe will host a conference call tomorrow, Wednesday, February 21, 2024, at 9am Eastern Time, to discuss the results from Q4 2023 and developments to date during Q1 2024. The call can be accessed by phone at (609) 746-1082 passcode 415049 or via the web at https://www.freeconferencecall.com/wall/180degreecapital. Additionally, slides that will be referred to during the presentation can be found on 180 Degree Capital’s investor relations website at https://ir.180degreecapital.com/ir-calendar.

About 180 Degree Capital Corp.

180 Degree Capital Corp. is a publicly traded registered closed-end fund focused on investing in and providing value-added assistance through constructive activism to what we believe are substantially undervalued small, publicly traded companies that have potential for significant turnarounds. Our goal is that the result of our constructive activism leads to a reversal in direction for the share price of these investee companies, i.e., a 180-degree turn. Detailed information about 180 Degree Capital and its holdings can be found on its website at www.180degreecapital.com.

Press Contact:
Daniel B. Wolfe
180 Degree Capital Corp.
973-746-4500
ir@180degreecapital.com

Mo Shafroth
Peaks Strategies
mshafroth@peaksstrategies.com  

Forward-Looking Statements

This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company's current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release. Please see the Company's securities filings filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company's business and other significant factors that could affect the Company's actual results. Except as otherwise required by Federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The reference and link to the website www.180degreecapital.com has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release. 180 Degree Capital is not responsible for the contents of third-party websites.

1. Cash including our holdings in money-market cash sweep funds and the expected receipt of $1.3 million in April 2024 related to the sale of TARA Biosystems, Inc., to Valo Health LLC.

2. Past performance is not an indication or guarantee of future performance. Gross unrealized and realized total returns of 180 Degree Capital's cash and securities of publicly traded companies are compounded on a quarterly basis, and intra-quarter cash flows from investments in or proceeds received from privately held investments are treated as inflows or outflows of cash available to invest or withdrawn, respectively, for the purposes of this calculation. 180 Degree Capital is an internally managed registered closed-end fund that has a portion of its assets in legacy privately held companies that are fair valued on a quarterly basis by the Valuation Committee of its Board of Directors, and 180 Degree Capital does not have an external manager that is paid fees based on assets and/or returns. Please see 180 Degree Capital's filings with the SEC, including its 2023 Annual Report on Form N-CSR for information on its expenses and expense ratios.

FAQ

What was the gross total return reported by 180 Degree Capital in the fourth quarter of 2023?

180 Degree Capital reported a +6.9% gross total return in the fourth quarter of 2023.

How much did the net asset value per share increase by?

The net asset value per share increased from $4.91 to $5.02.

What are 180 Degree Capital's assets primarily comprised of now?

180 Degree Capital's assets are almost 100% comprised of investments in public companies and cash.

What macroeconomic factors are expected to benefit 180 Degree Capital's investments in 2024?

The resilience of the US economy and potential future reductions in interest rates are expected to benefit the company's investments in 2024.

What is 180 Degree Capital's focus with constructive activism?

180 Degree Capital's constructive activism focuses on working with management teams and boards of directors of portfolio companies to create value for all stakeholders.